Directline Life Insurance: Level of Cover you need

Don’t underestimate the amount of life insurance required to protect your loved ones – sadly many people do. A few simple sums before you apply for a quote could make all the difference.

Generally the point of taking out life insurance is to make sure you don’t leave your loved ones in the lurch should the worst happen to you. But if you don’t take out any, or even enough cover, that’s exactly what you could do. For example, a total sum of £100,000 might sound like a lot, but how far will it stretch to cover a family of five over 20 years?

To get started on working out the right amount for you, first check out the range of Direct Line Life Insurance on offer under ‘Types of cover’ to check which one may be suitable for you. You’ll see that we offer Fixed Term Life Cover and Mortgage Life Cover. We also offer Life with Critical Illness Cover on both Fixed Term and Mortgage Life. We can’t tell you how much cover to take out, but there are some guidelines on maximum and minimum amounts. For full details on our Life Insurance policies you should read our Life Insurance Policy Documents online.

If you choose a Fixed Term Life Cover policy, you might wish to work out a figure that will provide enough security for your family or partner. This would provide a lump sum that could include cover for the mortgage, bills, education costs where relevant and any extra living costs that they are accustomed to.

If you choose a Mortgage Life Cover policy, the cover amount can be directly related to how much mortgage you have left to pay. The level of cover reduces each year, roughly in line with the outstanding balance on a standard repayment mortgage.

In both cases you also need to work out the ‘term’ of your policy – anywhere between five years and the time between now and your 70th birthday for persons between the ages of 17 and 64 years. The factors that may influence your choice of term are such as your age and how old your children are.
To help you work out a final sum for Fixed Term Life Cover, you may wish to consider the checklist below:

What are my monthly general expenses?

Mortgage (amount left to pay and in what format, consider would this be repaid from this life cover or another policy)
Family living costs (bills, education, food, clothing, transport, lifestyle / entertainment etc.)

What are my one-off expenses?

Debts to pay off (loans, bills)

Other questions to ask

• How much does your partner earn / could this contribute to costs?

• Do I have any savings / assets that could be sold?

• Does my partner have life insurance?

• How old are my children and what are their dependency / education needs?

• How old am I, and what is the death risk involved (is there any illness)?

• How long do I need the policy for?

• What is the rate of inflation and how will this affect me?

• Do I have other life cover?

When you have worked out the total amount of cover you need you are ready to apply for a Direct Line Life Insurance quote, we will work out a premium for you.
Link to previous articles:
Directline Life Insurance: Tips and Advice
Directline Life Insurance: Get Life insurance cover
Directline Life Insurance: How much cover do you need?
Direct Line Life Insurance: Types of Covers
Direct Line Life Insurance: Overview
Direct Line Pet Insurance Claims Process

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